Mervyns LLC filed for bankruptcy Tuesday, with the Northern California-based mid-tier department store chain planning to keep its 177 stores open while restructuring the retailer’s debt and realigning business operations. The company said it has identified a limited number of “under-performing stores that will be closed and will seek court approval of auction procedures for the selection of a liquidation firm to assist with store-closing sales. Exact store locations were not disclosed in court documents.
Mervyns said it received a commitment for $465 million in DIP financing from a group of lenders led by Wachovia Capital Finance Corp. to fund operations while the company is in bankruptcy, subject to court approval. The retailer owes $329.4 million under a pre-bankruptcy loan and $30 million on a promissory note.
Mervyns listed assets and debt of more than $500 million in Chapter 11 documents filed in U.S. Bankruptcy Court in Delaware.
The largest unsecured creditors in the active sports lifestyle market include Nike USA Inc., owed $4.7 million; Vans, Inc, owed $2.9 million; JanSport, Inc., which is owed $1.7 million; and Agron, Inc. (adidas accessories), $1.3 million. Levi Strauss was listed as the largest unsecured creditor, with $12.8 million owed.
The company reported a net loss of about $64 million on net sales of $2.5 billion and for the fiscal year ended in February.
Mervyns LLC was created in 2004 after the retailer was sold off by former parent Target Corp. to a group of investment firms, led by Sun Capital Partners Inc. of Boca Raton, Fla., and Cerberus Capital Management LP of New York. Even when still owned by Target, the retailer struggled with increasingly stiff competition.
Mervyns was founded in 1949.
